Foundations for Growth and Competitiveness 2026

Peru

Peru’s GDP per capita growth has slowed significantly since the end of the commodity boom in 2014. GDP per capita convergence with the OECD average has been slow, driven by employment growth as investment gains have been modest and productivity remains stagnant. This reflects deeper structural weaknesses, including limited human capital accumulation, weak institutions, and underdeveloped infrastructure.

Pervasive labour and business informality penalise productivity and equality and require a comprehensive agenda to reduce non-wage labour costs for low-income workers, foster skills development, strengthen labour inspection and enforcement, simplify employment and business regulations, and improve governance. Education quality remains low at all levels despite expanded access. Weak rule of law and corruption undermine trust and deter private investment, while heavy regulatory burdens restrict competition and business formalisation.

Economic performance

Gaps to the average of the upper half of the OECD countries

Source: Panels A and D: OECD, Economic Outlook database; Panel B: OECD, Labour Force Statistics database; Panel C: OECD, Economic Outlook and Productivity databases.

Selected policy gaps

Note: Other Latin American countries refers to the unweighted average of Argentina, Brazil, Chile, Colombia, Costa Rica and Mexico.

Source: OECD calculations based on the Foundations for Growth and Competitiveness database.

Human capital: Improve access to high-quality education and training

Expanding access to high-quality education is needed to raise productivity and promote formalisation. Learning outcomes for 15 years-old remain well below the OECD average, with disadvantaged students performing significantly worse than their more affluent peers. Access to high-quality early childhood education remains limited, particularly in rural and vulnerable areas, hindering later learning outcomes and reducing formal employment among women. Many public-school teachers continue teaching without meeting professional standards, undermining efforts to improve education quality and student outcomes. VET remains underutilized in Peru, with only 2% of youth enrolled, due to a fragmented system with unclear pathways and uneven quality, limiting its role in skills development and upward mobility.

Recommendations

✓ Roll out accessible, affordable, and high-quality early childhood education, prioritising vulnerable populations, disadvantaged areas, and children under age three.

✓ Improve teachers’ initial training, recruitment and selection, and promote merit-based promotions and rewards, including incentives for teacher’s reallocation to disadvantaged schools.

✓ Establish a coordinated, coherent, and systematic governance framework for VET, enforcing consistent quality standards, regulatory oversight and define clear pathways to higher education.

Labour market: Tackle labour informality and better integrate migrants

Peru’s labour market remains highly informal, with 71% of workers employed informally in 2024—well above the LAC average of 45%. Informality limits productivity and access to social protection, especially among self-employed workers, women, youth, and migrants. The current firm-sized based contribution schemes of social protection and other firm-size-based policies, such as tax schemes for micro and small firms, disproportionately burden low-wage workers and create incentives to stay informal. Migrants, accounting for more than 5% of the population, the vast majority Venezuelans, face specific barriers related to the lack of residence permits tied to requirements on employment contract duration, or hiring quotas imposed to firms discouraging formal hiring.

Recommendations

✓ Shift to progressive social security contributions based on labour earnings and review other firm-size-based policies, such as tax schemes, to remove incentives for hiring informally and strengthen labour inspection and enforcement.

✓ Facilitate migrant formalisation by aligning residence permit requirements with national hiring norms—reducing the minimum contract duration from 12 to 3 months—and eliminating restrictive quotas such as the 20% cap on foreign workers and the 30% payroll ceiling for SMEs.

Rule of law: Reduce and prevent corruption

Weak rule of law and corruption deter investment and trade, weaken government effectiveness, and erode trust in institutions and public services. Enforcement of anti-corruption measures remains weak, with limited coordination among oversight bodies and gaps in civil service and judicial systems. Judicial independence is compromised by the widespread use of provisional appointments and non-transparent selection processes, reducing the credibility and predictability of legal decisions.

Recommendations

✓ Establish a National Integrity and Transparency System and advance complementary reforms in justice, civil service, and public sector oversight to strengthen anticorruption enforcement across all levels of government.

✓ Strengthen judicial independence by implementing merit-based selection processes for judges and reducing reliance on provisional appointments.

Competition: Reduce regulatory barriers to boost business formalisation

High regulatory burdens and fragmented municipal licensing procedures deter business formalisation, competition and investment. The absence of a unified one-stop shop for business registration increases costs, especially for smaller firms, which make up the bulk of firms. Regulatory barriers in sectors like energy, e-communications, and transport constrain competition and productivity.

Recommendations

✓ Simplify business registration and tax compliance procedures, particularly for micro, small and mid-size firms, through digital platforms and one-stop shops to lower the cost of formalisation.

✓ Review regulations in network sectors to reduce entry barriers and promote competition, including phasing out undue advantages for incumbents, opening access to essential infrastructure (e.g. energy grids, telecom networks), and ensuring independent, well-resourced regulators with a clear mandate.

Openness to trade: Enhance digital trade and connectivity

Peru’s trade facilitation is constrained by low automation, limited cross-border cooperation, and regulatory barriers to digital trade. Gaps in digital infrastructure and connectivity and weak digital skills further limit access to digital services, especially for smaller firms. These challenges reduce productivity, discourage business creation, and limit the integration of domestic firms into global value chains.

Recommendations

✓ Accelerate the adoption of electronic single windows and interoperable digital systems across border agencies to simplify formalities and reduce clearance times.

✓ Invest in broadband expansion and digital skills development to improve access and adoption, particularly among micro, small and medium-sized firms and in underserved regions.

Recent progress on structural reforms

In recent years, Peru has undertaken key structural reforms, including a merger control regime in 2021 to strengthen competition, a pension reform in 2024 to improve coverage and adequacy, and deregulatory measures in 2025 to reduce administrative burdens on firms. The country also launched its OECD accession process in 2022. However, broader reform momentum has been limited by political instability with frequent leadership changes shifting focus away from long-term structural priorities.